Bill Chenier at iMortgage, sent us this information on first time home buyers...
Amount of the Home Buyer Tax Credit The full amount of credit is available for individuals with AGI (adjusted gross income) of no more than
$75,000 ($150,000 on a joint return). The credit is phased out for individuals with MAGI (modified
adjusted gross income) between $75,000 and $95,000. For married couples filing a joint return, the
phase out range is $150,000 to $170,000. To determine if the tax credit is reduced or eliminated by
the income phase-out range, individuals will need to determine their modified adjusted gross income.
If income falls between the above ranges, we recommend a consultation with a tax professional.
$75,000 ($150,000 on a joint return). The credit is phased out for individuals with MAGI (modified
adjusted gross income) between $75,000 and $95,000. For married couples filing a joint return, the
phase out range is $150,000 to $170,000. To determine if the tax credit is reduced or eliminated by
the income phase-out range, individuals will need to determine their modified adjusted gross income.
If income falls between the above ranges, we recommend a consultation with a tax professional.
The tax credit is 10% of the purchase price of the home, with a maximum credit of $7,500. The credit is limited to $3,750 for married couples filing separate returns. The credit is also limited to the same $7,500 maximum for unmarried persons who purchase a residence together. The credit has a very limited life-span. The home purchase must occur on or after April 9, 2008 and before July 1, 2009.
Qualifying as a First-Time Home Buyer
For the purpose of this tax credit, a first-time home buyer is defined as someone who has not owned
a primary residence within the three-year period prior to the date of the purchase of the home. For
married taxpayers, both must qualify as first-time home buyers. Ownership of a vacation home or
investment property that is not used as a principal residence does not disqualify them as a first-time
home buyer!
a primary residence within the three-year period prior to the date of the purchase of the home. For
married taxpayers, both must qualify as first-time home buyers. Ownership of a vacation home or
investment property that is not used as a principal residence does not disqualify them as a first-time
home buyer!
Income Limits
When to Claim & Repay the First-Time Home Buyer Credit The credit is fully refundable, meaning taxpayers will be able to obtain an additional federal tax refund
of up to $7,500 even if they have no other tax liabilities. Taxpayers will be able to claim the credit on
their 2008 tax return for homes purchased in 2008. For homes purchased in 2009, the IRS will allow
the purchasers to file an amended 2008 return to claim the credit.
of up to $7,500 even if they have no other tax liabilities. Taxpayers will be able to claim the credit on
their 2008 tax return for homes purchased in 2008. For homes purchased in 2009, the IRS will allow
the purchasers to file an amended 2008 return to claim the credit.
The credit must be repaid without interest in equal installments over 15 years, or at the time of sale of
the property. The homeowner does not have to begin making repayments on the credit until 2 years
after the credit is claimed. When the homeowner sells the house the remaining credit is due from the
profit on the sale. If there is insufficient profit, then the remaining credit payback would be forgiven.
The credit will be disallowed if a taxpayer sells the house before the end of the same year in which the
house was purchased. The credit also needs to be repaid in full if the property is no longer the taxpayer's primary residence.
the property. The homeowner does not have to begin making repayments on the credit until 2 years
after the credit is claimed. When the homeowner sells the house the remaining credit is due from the
profit on the sale. If there is insufficient profit, then the remaining credit payback would be forgiven.
The credit will be disallowed if a taxpayer sells the house before the end of the same year in which the
house was purchased. The credit also needs to be repaid in full if the property is no longer the taxpayer's primary residence.
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